At the tail end of last week, Apple announced the iPhone 7, the latest product in their smartphone range. The device will launch on 16th September 2016. While many consumers have already indicated that they are happy with the device shown, Wall Street is not quite so happy with Apple shares falling.
Samsung v Apple Smartphone Sales
While Samsung are going through a bit of a tough time recently with speculation about the quality of their devices after many users have reported the phone exploding in their hands, the company has managed to outsell Apple considerably recently when it comes to smartphone sales. In the fourth quarter of 2015, Samsung shipped 81.3 million smartphones. Apple shipped 74.8 million. This indicates that the market is certainly trending towards Samsung devices. Even with the issues that the company is going through, investors seem to be certain that Apple will not be able to make up lost ground.
Steepest Fall since ‘Brexit’
The day after the announcement of the iPhone 7, the price of Apple shares fell by 2.5%. This is the sharpest fall in the share price since June. In this month, the United Kingdom voted to leave the European Union. This triggered mass selling of shares around the globe, with the technology sector being the hardest hit.
While the price has recovered somewhat since Friday, the price of Apple shares, currently valued at around $110 has yet to reach the highs that the company experienced last year, where it was common for the share price to be valued at over $120.
This is unique for the company. Normally when they announce a new device, share prices will rise drastically. Investors see this as an easy pay day, as sales are virtually guaranteed to be coming in for Apple. However, there is a logical reason as to why the cost fell so sharply.
Why did the Share Price Fall?
Throughout the Apple keynote speech, the share price for Apple rose quite sharply. As each new feature was announced the value of the shares climbed. It continued this way throughout the presentation. However, it was the information that was released the next day which caused the issues.
The next day Apple, in a statement, announced that they would no longer be releasing sales figures of their devices. This would begin with the Apple iPhone 7:
“In years past, we’ve announced how many new iPhones had been sold as of the first weekend following launch,” Apple stated “But as we have expanded our distribution through carriers and resellers to hundreds of thousands of locations around the world, we are now at a point where we know before taking the first customer pre-order that we will sell out of iPhone 7.”
According to Time, it is this reluctance to release sale’s data which resulted in the mass selling of shares. Investors need hard numbers to go on. If they do not get them, then they will not be willing to take the risk. Apple stated that the only reason why they are not release sale’s figures is because they know they are going to sell out of the devices, but investors are still not willing to take the gamble.